(1) This section applies if, in respect of a redundancy payment or an approved contractual payment payable by an employer—
(a) the Secretary of State makes a payment under section 167 of the Employment Rights Act 1996 (c. 18), or
(b) the Department for Employment and Learning makes a payment under Article 202 of the Employment Rights (Northern Ireland) Order 1996 (S.I. 1996/1919 (N.I. 16)).
(2) So far as the employer reimburses the Secretary of State or Department for the payment, sections 77 to 80 apply as if the payment were—
(a) a redundancy payment, or
(b) an approved contractual payment,
made by the employer.
82 Contributions to local enterprise organisations or urban regeneration companies
(1) This section applies if a company carrying on a trade (“the contributor”) incurs expenses in making a contribution (whether in cash or in kind)—
(a) to a local enterprise organisation (see section 83), or
(b) to an urban regeneration company (see section 86),
and a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.
(2) In calculating the profits of the trade, a deduction is allowed under this section for the expenses.
(3) But if, in connection with the making of the contribution, the contributor or a connected person—
(a) receives a disqualifying benefit of any kind, or
(b) is entitled to receive such a benefit,
the amount of the deduction is restricted to the amount of the expenses less the value of the benefit.
(4) For this purpose it does not matter whether a person receives, or is entitled to receive, the benefit—
(a) from the local enterprise organisation or urban regeneration company concerned, or
(b) from anyone else.
(5) Subsection (6) applies if—
(a) a deduction has been made under this section, and
(b) the contributor or a connected person receives a disqualifying benefit that is in any way attributable to the contribution.
(6) An amount equal to the value of the benefit (so far as not brought into account in determining the amount of the deduction)—
(a) is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the benefit is received, or
(b) if the contributor has permanently ceased to carry on the trade before the benefit is received, is treated as a post-cessation receipt (see Chapter 15).
(7) In this section “disqualifying benefit” means a benefit the expenses of obtaining which, if incurred by the contributor directly in a transaction at arm's length, would not be allowable as a deduction in calculating the profits of the trade.
(1) For the purposes of section 82 “local enterprise organisation” means—
(a) a local enterprise agency,
(b) a training and enterprise council,
(c) a Scottish local enterprise company, or
(d) a business link organisation.
(2) “Local enterprise agency” means a body for the time being approved as a local enterprise agency for the purposes of section 82 by the relevant national authority, that is to say by—
(a) the Secretary of State (in relation to England or Northern Ireland),
(b) the Scottish Ministers (in relation to Scotland), or
(c) the Welsh Ministers (in relation to Wales).
For further provision about approvals by the relevant national authority, see sections 84 and 85.
(3) “Training and enterprise council” means a body with which the Secretary of State has an agreement under which the body is to carry out the functions of a training and enterprise council.
(4) “Scottish local enterprise company” means a company with which—
(a) Scottish Enterprise, or
(b) Highlands and Islands Enterprise,
has an agreement under which the company is to carry out the functions of a local enterprise company.
(5) “Business link organisation” means a person authorised by or on behalf of the Secretary of State to use a trade mark designated by the Secretary of State for the purposes of this subsection.
(1) The relevant national authority may approve a body as a local enterprise agency for the purposes of section 82 only if conditions A and B are met.
(2) But if those conditions are met, the body may be approved—
(a) whatever its status or structure, and
(b) even if it is not described as a local enterprise agency.
(3) Condition A is that the relevant national authority is satisfied—
(a) that the body's sole aim is the promotion or encouragement of local enterprise, or
(b) that one of the body's main aims is the promotion or encouragement of local enterprise and that it has or is about to have a separate fund for the sole purpose of pursuing that aim.
(4) For this purpose “local enterprise” means industrial and commercial activity or enterprise in a particular area in the United Kingdom, with particular reference to encouraging the formation and development of small businesses.
(5) Condition B is that the body is precluded from paying or transferring any of its income or profit directly or indirectly—
(a) to any of its members, or
(b) to any person charged with the control and direction of its affairs.
(6) The payment of—
(a) reasonable remuneration for goods, labour or power supplied or for services provided,
(b) reasonable interest on money lent, or
(c) reasonable rent for premises,
does not count as a payment or transfer of income or profit for the purposes of subsection (5).
85 Supplementary provisions with respect to approvals
(1) This section applies for the purposes of section 84.
(2) The relevant national authority may give a body approval that is conditional on its compliance with such requirements as to—
(a) accounts,
(b) provision of information, and
(c) other matters,
as the relevant national authority considers appropriate.
(3) If the relevant national authority approves a body on the basis that it has or is about to have a separate fund (see section 84(3)(b))—
(a) the approval must specify the fund, and
(b) section 82 applies only to a contribution to the body made wholly to or for the purposes of the fund.
(4) The relevant national authority must withdraw the approval of a body as a local enterprise agency if—
(a) condition A or B in section 84 is no longer met, or
(b) the body is failing to comply with a requirement imposed as a condition of its approval.
(5) The relevant national authority must give notice of withdrawal to the body concerned, specifying the date from which the withdrawal takes effect (which may be earlier than the date on which the notice is given).
(1) For the purposes of section 82 “urban regeneration company” means any body of persons which the Treasury by order designates as an urban regeneration company for the purposes of that section.
(2) A body may be so designated only if—
(a) its sole or main function is to co-ordinate the regeneration of a specific urban area in the United Kingdom,
(b) it is expected to seek to perform that function by creating a plan for the development of that area and trying to secure that the plan is carried into effect, and
(c) in co-ordinating the regeneration of that area, it is expected to work together with some or all local or other public authorities which exercise functions in relation to the whole or part of that area.
(3) An order under this section may be framed so as to take effect on a date earlier than the making of the order, but not earlier than 3 months before the date on which the order is made.
86A Contributions to flood and coastal erosion risk management projects
(1) This section applies if—
(a) a company carrying on a trade (“the contributor”) incurs expenses in making a qualifying contribution to a qualifying flood or coastal erosion risk management project, and
(b) a deduction would not otherwise be allowable for the expenses in calculating the profits of the trade.
(2) In determining whether the condition in subsection (1)(b) is satisfied, a deduction giving effect to a capital allowance is to be disregarded.
(3) In calculating the profits of the trade, a deduction is allowed under this section for the expenses.
(4) But if, in connection with the making of the contribution, the contributor or a connected person—
(a) receives a disqualifying benefit, or
(b) is entitled to receive such a benefit,
no deduction is allowed.
(5) For the purposes of subsection (4) it does not matter whether a person receives, or is entitled to receive, the benefit—
(a) from the carrying out of the project, or
(b) from any person.
(6) Subsection (7) applies if—
(a) a deduction has been made under this section in relation to the contribution, and
(b) the contributor or a connected person receives—
(i) a refund of any part of the contribution, if the contribution is a sum of money, or
(ii) compensation for any part of the contribution, if the contribution is the provision of services,
in money or money's worth.
(7) The amount of, or an amount equal to the value of, the refund or compensation (so far as not otherwise brought into account in calculating the profits of the trade or treated as a post-cessation receipt)—
(a) is brought into account in calculating the profits of the trade, as a receipt arising in the accounting period in which the refund or compensation is received, or
(b) if the contributor has permanently ceased to carry on the trade before the refund or compensation is received, is treated as a post-cessation receipt (see Chapter 15).
(8) In this section “disqualifying benefit” means a benefit consisting of money or other property, but it does not include—
(a) a refund of the contribution, if the contribution is a sum of money;
(b) compensation for the contribution, if the contribution is the provision of services;
(c) a structure that—
(i) is or is to be used for the purposes of flood or coastal erosion risk management, and
(ii) is put in place in carrying out the project;
(d) an addition to a structure where—
(i) the structure is or is to be used for the purposes of flood or coastal erosion risk management, and
(ii) the addition is made in carrying out the project;
(e) land, plant or machinery that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management;
(f) a right over land that is or is to be used, in the realization of the project, for the purposes of flood or coastal erosion risk management.
(9) In subsection (8) “structure” includes road, path, pipe, earthwork, plant and machinery.
(1) This section applies for the purposes of section 86A.
(2) A flood or coastal erosion risk management project is a qualifying project if—
(a) an English risk management authority has applied to the Environment Agency for a grant under section 16 of the Flood and Water Management Act 2010 in order to fund the project, or
(b) the Environment Agency has determined that it will carry out the project,
and the Environment Agency has allocated funding by way of grant-in-aid to the project.
(3) A contribution to a flood or coastal erosion risk management project is a qualifying contribution if the contribution is made—
(a) for the purposes of the project, and
(b) under an agreement between—
(i) the company making the contribution, and
(ii) the applicant authority or (as the case may be) the Environment Agency,
or between those two bodies and other persons.
(4) References to a flood risk management project or a coastal erosion risk management project are to be interpreted in accordance with sections 1 to 3 of the Flood and Water Management Act 2010.
(5) In section 86A and this section—
“contribution”, in relation to an accounting period, means—
a sum of money paid in that accounting period, or
any services provided in that accounting period;
“English risk management authority” has the meaning given by section 6(14) of the Flood and Water Management Act 2010.
(1) If a company carrying on a trade incurs expenses of a revenue nature on research and development—
(a) related to the trade, and
(b) directly undertaken by or on behalf of the company,
a deduction is allowed for the expenses in calculating the profits of the trade.
(2) For this purpose expenses incurred on research and development—
(a) do not include expenses incurred in the acquisition of rights in, or arising out of, research and development, but
(b) subject to that, include all expenses incurred in carrying out, or providing facilities for carrying out, research and development.
(3) The reference in this section to research and development related to a trade includes—
(a) research and development which may lead to or facilitate an extension of the trade, and
(b) research and development of a medical nature which has a special relation to the welfare of workers employed in the trade.
(4) The same expenses may not be brought into account under this section in relation to more than one trade.
(5) In this section “research and development” has the meaning given by section 1138 of CTA 2010 and includes oil and gas exploration and appraisal.
88 Payments to research associations, universities etc
(1) If a company carrying on a trade—
(a) pays any sum to a body in the case of which exemption may be claimed as a result of section 491 of CTA 2010 (scientific research associations) and which has as its object the undertaking of research and development which may lead to or facilitate an extension of the appropriate class of trade, or
(b) pays to an approved university, college, research institute or other similar institution any sum to be used for scientific research related to the appropriate class of trade,
a deduction is allowed for the sum in calculating the profits of the trade.
(2) The deduction is allowed for the accounting period in which the payment is made.
(3) In this section—
(a) “the appropriate class of trade” means the class of trade to which the trade carried on by the company belongs, and
(b) “scientific research” means any activities in the fields of natural or applied science for the extension of knowledge.
(4) For the purposes of this section a university, college research institute or other similar institution is approved if it is for the time being approved for the purposes of this section by the Secretary of State.
(5) The reference in subsection (1)(b) to scientific research related to the appropriate class of trade includes—
(a) scientific research which may lead to or facilitate an extension of trades of the appropriate class, and
(b) scientific research of a medical nature which has a special relation to the welfare of workers employed in trades of the appropriate class.
(6) If a question arises as to—
(a) whether, or
(b) to what extent,
any activities constitute or constituted scientific research, an officer of Revenue and Customs must refer the question for decision to the Secretary of State, whose decision is final.
(7) The same expenses may not be brought into account under this section in relation to more than one trade.
In calculating the profits of a trade, a deduction is allowed for expenses incurred—
(a) in obtaining for the purposes of the trade the grant of a patent or the extension of a patent's term, or
(b) in connection with a rejected or abandoned application for a patent made for the purposes of the trade.
In calculating the profits of a trade, a deduction is allowed for expenses incurred in obtaining for the purposes of the trade—
(a) the registration of a design or trade mark,
(b) the extension of a period for which the right in a registered design subsists, or
(c) the renewal of registration of a trade mark.
91 Payments to Export Credits Guarantee Department
In calculating the profits of a trade, a deduction is allowed for a sum payable by the company carrying on the trade to the Export Credits Guarantee Department—
(a) under an agreement entered into as a result of arrangements made under section 2 of the Export and Investment Guarantees Act 1991 (c. 67) (insurance in connection with overseas investment), or
(b) with a view to entering into such an agreement.
(1) In calculating the profits of a trade carried on by a company, a deduction is allowed for any sum—
(a) spent by the company in paying a levy, or
(b) paid by the company as a result of an award of costs under costs rules,
so far as it is not otherwise allowable.
(2) For the purposes of this section “costs rules” means—
(a) rules made under section 230 of FISMA 2000, or
(b) provision relating to costs contained in the standard terms fixed under paragraph 18 of Schedule 17 to FISMA 2000.
(3) For the purposes of this section “levy” means—
(a) a payment required under rules made under section 136(2) of FISMA 2000,
(b) a levy imposed under the Financial Services Compensation Scheme,
(c) a payment required under rules made under section 234 of FISMA 2000,
(d) a payment required under the rules referred to in paragraph 14(1) of Schedule 17 to FISMA 2000 in accordance with paragraph 15(1) of that Schedule, or
(e) a payment required in accordance with the standard terms fixed under paragraph 18 of that Schedule (other than a sum paid as a result of an award of costs under costs rules).
(1) This section applies in relation to a limited liability partnership if section 1273A(2) (limited liability partnerships: salaried members) applies in the case of a member of the partnership (“M”).
(2) In calculating for an accounting period under section 1259 (calculation of firm's profits and losses) the profits of a trade carried on by the limited liability partnership, a deduction is allowed for expenses paid by the partnership in respect of M's employment under section 1273A(2) if no deduction would otherwise be allowed for the payment.
(3) This section is subject to—
(a) section 53 (capital expenditure),
(b) section 54 (expenses not wholly and exclusively for trade etc),
(c) section 1298 (business entertainment and gifts), and
(d) section 1302 (social security contributions).
(1) Items of a capital nature must not be brought into account as receipts in calculating the profits of a trade.
(2) But this does not apply to items which, as a result of any provision of the Corporation Tax Acts, are brought into account as receipts in calculating the profits of the trade.
(1) This section applies if—
(a) in calculating the profits of a trade, a deduction is allowed for the expense giving rise to a debt owed by the company carrying on the trade,
(b) all or part of the debt is released, and
(c) the release is not part of a statutory insolvency arrangement.
(2) The amount released—
(a) is brought into account as a receipt in calculating the profits of the trade, and
(b) is treated as arising in the accounting period in which the release is effected.
95 Acquisition of trade: receipts from transferor's trade
(1) This section applies if —
(a) a person (“the transferor”) permanently ceased to carry on a trade at any time,
(b) at that time the transferor transferred to another person (“the transferee”) the right to receive sums arising from the carrying on of the trade, and
(c) the transferee subsequently carries on the transferor's trade.
(2) Sums—
(a) which the transferee receives as a result of the transfer, and
(b) which are not brought into account in calculating the profits of the transferor's trade for corporation or income tax purposes of any period before the cessation,
are brought into account in calculating the profits of the transferee's trade in the accounting period in which they are received.
(3) Any sums mentioned in subsection (1)(b) which are received after the transferor has permanently ceased to carry on the trade are not post-cessation receipts (see Chapter 15).
(1) For the purposes of sections 98 and 99 a payment or other benefit is a reverse premium if—
(a) conditions A, B and C are met, and
(b) it is not excluded by section 97.
(2) Condition A is that a company (“the recipient”) receives the payment or other benefit by way of inducement in connection with a transaction being entered into by—
(a) the recipient, or
(b) a person connected with the recipient.
(3) Condition B is that the transaction (the “property transaction”) is one under which—
(a) the recipient, or
(b) the person connected with the recipient,
becomes entitled to an estate, interest or right in or over land.
(4) Condition C is that the payment or other benefit is paid or provided by—
(a) the person (“the grantor”) by whom the estate, interest or right is granted or was granted at an earlier time,
(b) a person connected with the grantor, or
(c) a nominee of, or a person acting on the directions of, the grantor or a person connected with the grantor.
(1) A payment or other benefit is not a reverse premium so far as it is brought into account under section 532 of CAA 2001 (the general rule excluding contributions) to reduce the recipient's expenditure qualifying for capital allowances.
(2) A payment or other benefit received in connection with a property transaction is not a reverse premium if—
(a) the person entering into the transaction is an individual, and
(b) the transaction relates to premises occupied or to be occupied by the individual as the individual's only or main residence.
(3) A payment or other benefit is not a reverse premium so far as it is consideration for the transfer of an estate or interest in land which constitutes the sale in a sale and leaseback arrangement.
(4) A “sale and leaseback arrangement” means any such arrangement as is described in section 681AA(1) or (2) or 681AB(1) or (2) of ITA 2007 or section 835(1) or (2), 836(1) or (2) or 850 of CTA 2010.
(1) A reverse premium is treated for corporation tax purposes as a receipt of a revenue nature.
(2) If the recipient enters into the property transaction for the purposes of a trade carried on (or to be carried on) by the recipient, the reverse premium is brought into account in calculating the profits of the trade.
(3) If subsection (2) does not apply, the reverse premium is charged to corporation tax in accordance with section 250 (reverse premium taxed as property business receipt).
(1) This section applies if—
(a) two or more of the parties to the property arrangements are connected persons, and
(b) the terms of those arrangements are not such as would reasonably have been expected if those persons had been dealing at arm's length.
(2) The terms of the property arrangements meet the condition in subsection (1)(b) if they differ to a significant extent from the terms which, at the time the arrangements were entered into, would be regarded as normal and reasonable—
(a) in the market conditions then prevailing, and
(b) between persons dealing with each other at arm's length in the open market.
(3) The whole amount or value of the reverse premium brought into account under section 98 is brought into account in the first relevant period of account.
(4) “The first relevant period of account” means the period of account in which the property transaction is entered into.
(5) However if the recipient enters into the property transaction for the purposes of a trade—
(a) which is not then carried on by the recipient, but
(b) which the recipient subsequently starts to carry on,
“the first relevant period of account” means the first period of account in which the recipient carries on the trade.
For the purposes of this section and sections 96 to 99—
(a) persons are treated as connected with each other if they are connected at any time during the period when the property arrangements are entered into, and
(b) “the property arrangements” means the property transaction and any arrangements entered into in connection with it (whether before it, at the same time as it or after it).
(1) This section applies if—
(a) a deduction has been made in calculating the profits of a trade for a payment to a mutual concern for the purposes of its mutual business,
(b) the concern is being or has been wound up or dissolved,
(c) a company (“the recipient”) which is carrying on the trade, or was doing so at the time of the payment, receives money or money's worth representing the concern's assets, and
(d) the assets in question represent profits of the mutual business conducted by the concern.
(2) If the recipient is carrying on the trade at the time the money or money's worth is received, the amount or value of the money or money's worth is brought into account as a receipt in calculating the profits of the trade.
(3) If the recipient—
(a) is not carrying on the trade at the time the money or money's worth is received, but
(b) was doing so at the time of the payment to the mutual concern,
the amount or value of the money or money's worth is treated as a post-cessation receipt (see Chapter 15).
(4) For the purposes of this section money or money's worth represents assets of a mutual concern if it—
(a) forms part of the assets of the concern,
(b) forms part of the consideration for the transfer of the assets of the concern as part of a scheme of amalgamation or reconstruction which involves its winding up, or
(c) consists of the consideration for a transfer or surrender of a right to receive anything falling within paragraph (a) or (b) and does not give rise to a charge to corporation tax on the company receiving it otherwise than as a result of this section.
(5) If a transfer or surrender of a right to receive anything which—
(a) forms part of the assets of a mutual concern, or
(b) forms part of the consideration for the transfer of the assets of a mutual concern,
is not at arm's length, the company making the transfer or surrender is treated as receiving consideration equal to the value of the right.
(6) In this section references to a mutual concern are to a body corporate which has at any time carried on a trade which consists of or includes the conduct of mutual business (whether or not confined to the members of the body corporate).
(7) For the purposes of this section a trade does not consist of or include the conduct of mutual business if all the profits of the trade are chargeable to corporation or income tax.
(1) This section applies if a company carrying on a trade receives a payment by way of a grant under—
(a) section 7 or 8 of the Industrial Development Act 1982 (c. 52), or
(b) Article 7, 9 or 30 of the Industrial Development (Northern Ireland) Order 1982 (S.I. 1982/1083 (N.I. 15)).
(2) The payment is brought into account as a receipt in calculating the profits of the trade unless—
(a) the grant is designated as made towards the cost of specified capital expenditure,
(b) the grant is designated as compensation for the loss of capital assets, or
(c) the grant is for all or part of a corporation tax liability (including one that has already been met).
(1) This section applies if—
(a) a deduction has been made for a loss or expense in calculating the profits of a trade,
(b) a company carrying on the trade recovers a sum under an insurance policy or a contract of indemnity in respect of the loss or expense, and
(c) the sum is not of a revenue nature.
(2) The sum is brought into account as a receipt in calculating the profits of the trade (but only up to the amount of the deduction).
(1) This section applies if—
(a) a company carries on a trade, and
(b) a payment is made to the company as a result of a repayment provision.
(2) The payment is brought into account as a receipt in calculating the profits of the trade.
(3) For the purposes of this section “repayment provision” means—
(a) any provision made by virtue of section 136(7) or 214(1)(e) of FISMA 2000, or
(b) any provision made by scheme rules for fees to be refunded in specified circumstances.
(4) In this section “scheme rules” means the rules referred to in paragraph 14(1) of Schedule 17 to FISMA 2000.
(1) This section applies if a company carrying on a trade (“the donor”) gives an article for the purposes of—
(a) a charity, a registered club or a body listed in subsection (4), or
(b) a designated educational establishment (see section 106),
and the article is one manufactured, or of a class or description sold, by the donor in the course of the trade.
(2) In calculating the profits of the trade, no amount is required to be brought into account as a receipt in consequence of the disposal of the article.
(3) In this section “registered club” has the meaning given by section 658(6) of CTA 2010 (relief for community amateur sports clubs).
(4) The bodies referred to in subsection (1)(a) are—
(a) the Trustees of the National Heritage Memorial Fund, and
(b) the Historic Buildings and Monuments Commission for England, ...
() . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5) This section needs to be read with section 108 (receipt of benefits by donor or connected person).
(6) This section is subject to section 203 of CTA 2010 (certain disposals of investments to charity) and sections 939F and 939FB of that Act (removal of corporation tax relief in respect of tainted charity donations .
106 Meaning of “designated educational establishment”
(1) For the purposes of section 105 “designated educational establishment” means an educational establishment designated, or within a category designated, in regulations made—
(a) for England and Scotland, by the Secretary of State,
(b) for Wales, by the Welsh Ministers, and
(c) for Northern Ireland, by the Department of Education.
(2) The regulations may make different provision for different areas.
(3) If any question arises as to whether an educational establishment is within a category designated in the regulations, an officer of Revenue and Customs must refer the question for decision—
(a) in the case of an establishment in England or Scotland, to the Secretary of State,
(b) in the case of an establishment in Wales, to the Welsh Ministers, and
(c) in the case of an establishment in Northern Ireland, to the Department of Education.
(4) The power of the Secretary of State or the Welsh Ministers to make regulations under this section is exercisable by statutory instrument.
(5) A statutory instrument containing any regulations made by the Secretary of State under this section is subject to annulment in pursuance of a resolution of the House of Commons.
(6) A statutory instrument containing any regulations made by the Welsh Ministers under this section is subject to annulment in pursuance of a resolution of the National Assembly for Wales.
(7) Regulations made under this section by the Department of Education—
(a) are a statutory rule for the purposes of the Statutory Rules (Northern Ireland) Order 1979 (S.I. 1979/1573 (N.I. 12)), and
(b) are subject to negative resolution within the meaning of section 41(6) of the Interpretation Act (Northern Ireland) 1954 (c. 33 (N.I.)).
(1) This section applies if—
(a) a company carrying on a trade makes a gift from trading stock of medical supplies or medical equipment,
(b) it makes the gift for humanitarian purposes, and
(c) the supplies or equipment are for human use.
(2) In calculating the profits of the trade, no amount is required to be brought into account as a receipt in consequence of the gift.
(3) In calculating the profits of the trade, a deduction is allowed for any costs of transportation, delivery or distribution incurred by the company in making the gift.
(4) The deduction is allowed for the accounting period in which the costs are incurred.
(5) The Treasury may by order provide that this section is not to have effect in relation to medical supplies or medical equipment of any description specified in the order.
(6) This section needs to be read with section 108 (receipt of benefits by donor or connected person).
108 Receipt of benefits by donor or connected person
(1) This section applies if a company carrying on a trade makes a gift in relation to which relief is given under—
(a) section 105,
(b) section 107(2), or
(c) section 63(2) of CAA 2001 (gifts to charities etc of plant or machinery used in the trade),
and the company, or a person connected with the company, receives a benefit which is in any way attributable to the making of the gift.
(2) This section also applies if—
(a) relief is given under section 107(3) for costs of transportation, delivery or distribution incurred by a company carrying on a trade, and
(b) the company, or a person connected with the company, receives a benefit which is in any way attributable to the company's incurring of those costs.
(3) An amount equal to the value of the benefit—
(a) is brought into account in calculating the profits of the trade, as a receipt of the trade arising in the accounting period in which the benefit is received, or
(b) if the company has permanently ceased to carry on the trade before the benefit is received, is treated as a post-cessation receipt (see Chapter 15).
(1) A company, or a firm of which a company is a member, which keeps or has kept a production herd for the purposes of a trade may make an election under this Chapter (a “herd basis election”).
(2) In calculating the profits of the trade, animals which are part of a production herd in relation to which a herd basis election has effect—
(a) are not treated as trading stock (see section 50), but
(b) are treated instead in accordance with sections 112 to 121 (“the herd basis rules”).
(3) This Chapter is expressed in terms of farmers but applies to any company, or firm of which a company is a member, which keeps or has kept a production herd for the purposes of a trade, whether or not the trade is farming.
(4) References in this Chapter to keeping a production herd are to keeping it for the purposes of the trade.
110 Meaning of “animal”, “herd”, “production herd” etc
(1) In this Chapter—
(a) “animal” means any animal or other living creature,
(b) “herd” includes a flock and any other collection of animals (however named), and
(c) “production herd” means, in relation to a farmer, a herd of animals of the same species (irrespective of breed) kept by the farmer wholly or mainly for the products obtainable from the living animal which the animals produce for the farmer to sell.
(2) For this purpose “the products obtainable from the living animal” means—
(a) the young of the animal, or
(b) any other product obtainable from the animal without slaughtering it.
(3) For the purposes of this Chapter the general rule is that immature animals kept in a production herd are not part of the herd.
(4) There is an exception to this rule if—
(a) the nature of the land on which the herd is kept means that animals which die or cease to be part of the herd can be replaced only by animals bred and reared on the land,
(b) the immature animals in question are bred in the herd and are maintained in the herd for the purpose of replacing other animals, and
(c) it is necessary to maintain the immature animals for that purpose.
(5) In that case the immature animals are part of the herd for the purposes of this Chapter, but only so far as they are required to prevent a fall in the numbers of the herd.
(6) References in this Chapter to an animal being added to a herd include references to an immature animal that is not part of the herd reaching maturity.
(7) This Chapter applies—
(a) in relation to animals kept singly as it applies in relation to herds, and
(b) in relation to shares in animals as it applies in relation to animals themselves.
(1) This section applies for the purposes of this Chapter.
(2) A production herd kept by a farmer is of the same class as another production herd only if—
(a) the animals kept in both herds are of the same species (irrespective of breed), and
(b) the products produced for the farmer to sell (for which the herds are wholly or mainly kept) are of the same kinds in both herds.
(3) References to the sale of an animal include references to its death or destruction.
(4) References to the sale proceeds of an animal include references to—
(a) money received from an insurer because of the animal's death or destruction,
(b) compensation money received because of the animal's death or destruction, and
(c) the sale proceeds of the animal's carcass or any part of its carcass.
(5) Female animals become mature—
(a) in the case of laying birds, when they first lay, and
(b) in any other case, when they produce their first young.
(6) 20% or more of a herd is a substantial part of the herd, but a lesser percentage than 20% is capable of being a substantial part of the herd depending on the circumstances of the case concerned.
(1) In calculating the profits of the trade, no deduction is allowed for the initial cost of the herd.
(2) In calculating the profits of the trade, the value of the herd is not brought into account.
(1) This section applies for the purpose of calculating the profits of the trade if an animal is added to the herd, unless it replaces another animal in the herd.
(2) No deduction is allowed for the cost of the animal.
(3) If, immediately before it was added to the herd, the animal was part of the farmer's trading stock, the balancing amount is brought into account as a receipt.
(4) “The balancing amount” means—
(a) in the case of an animal bred by the farmer, the cost of breeding the animal and rearing it to maturity, and
(b) in any other case, the sum of the initial cost of acquiring the animal and the cost (if any) incurred by the farmer in rearing the animal to maturity.
(1) This section applies for the purpose of calculating the profits of the trade if—
(a) an animal (“the old animal”) is sold from the herd or otherwise ceases to be part of the herd, and
(b) it is replaced in the herd by another animal (“the new animal”).
(2) The sale proceeds (if any) of the old animal are brought into account as a receipt.
(3) But this needs to be read with—
(a) section 115 (amount of receipt if old animal slaughtered under disease control order),
(b) section 118 (acquisition of new herd begun within 5 years of sale), and
(c) section 120 (replacement of part sold begun within 5 years of sale).
(4) Except so far as otherwise allowable, a deduction is allowed under this section for the cost of the new animal.
(5) But if the new animal is of better quality than the old animal, the amount of the deduction must not exceed the amount that it would have been necessary to spend to replace the old animal with an animal of the same quality.
115 Amount of receipt if old animal slaughtered under disease control order
(1) This section applies for the purposes of section 114.
(2) If—
(a) the old animal was slaughtered under a disease control order, and
(b) the new animal is of worse quality than the old animal,
the amount brought into account as a receipt under section 114 must not exceed the equivalent amount for the new animal.
(3) For this purpose “a disease control order” means an order made under the law relating to the diseases of animals by—
(a) central government,
(b) a devolved authority,
(c) a local authority, or
(d) another public authority.
(4) If, immediately before it was added to the herd, the new animal was part of the farmer's trading stock, “the equivalent amount for the new animal” means—
(a) in the case of an animal bred by the farmer, the cost of breeding the animal and rearing it to maturity, and
(b) in any other case, the sum of the initial cost of acquiring the animal and the cost (if any) incurred by the farmer in rearing the animal to maturity.
(5) Otherwise “the equivalent amount for the new animal” means the cost of the new animal.
(1) This section applies for the purpose of calculating the profits of the trade if an animal is sold from the herd unless—
(a) it is replaced in the herd by another animal (see section 114), or
(b) it is sold as part of the sale of the whole or a substantial part of the herd that takes place all at once or over a period not longer than 12 months (see section 117).
(2) A profit arising from the sale is brought into account as a receipt.
(3) A deduction is allowed for a loss arising from the sale.
(4) The amount of the profit or loss is the difference between the sale proceeds of the animal and the deductible amount for the animal.
(5) “The deductible amount for the animal” means—
(a) in the case of an animal bred by the farmer, the cost of breeding the animal and rearing it to maturity,
(b) in the case of an animal acquired by the farmer for valuable consideration, the sum of the initial cost to the farmer of acquiring the animal and the cost (if any) incurred by the farmer in rearing the animal to maturity, and
(c) in the case of an animal acquired by the farmer but not for valuable consideration, the sum of the market value of the animal when acquired and the cost (if any) incurred by the farmer in rearing the animal to maturity.
(1) This section applies for the purpose of calculating the profits of the trade if, either all at once or over a period not longer than 12 months, the herd or a substantial part of the herd is sold unless—
(a) section 118 applies (acquisition of new herd begun within 5 years of sale), or
(b) section 120 applies (replacement of part sold begun within 5 years of sale),
but paragraph (a) is subject to subsection (5) of section 118 (so far as that section provides for a case in which this section is to apply).
(2) A profit arising from the sale is not brought into account as a receipt.
(3) No deduction is allowed for a loss arising from the sale.